Gas storage facility approved near Newcastle

AGL hopes to have its newly approved gas storage facility at Tomago up and running in 2015.

ABC News - file image

Gas giant AGL has been given Federal Government approval to build a $300 million gas storage plant near Newcastle.

AGL Energy plans to build the plant on land at Tomago.

It will be the first of its kind in the state, with capacity to store 30,000 tonnes of liquefied natural gas supplying Newcastle, Sydney and Wollongong.

The company says it will have significant benefits for the region, creating up to 300 construction jobs and 15 operational jobs.

Today the company told the Australian Stock Exchange that it has Commonwealth approval to start building the gas storage facility.

The company says it has done a comprehensive ecological assessment and impact mitigation plan and has been working with the relevant authorities to ensure flora and fauna are protected.

AGL says New South Wales will be in a position to avert a gas supply crisis once the facility is built.

The company's Group General manager of Upstream Gas Mike Moraza says gas supplies at the site can be called upon at short notice if there are interruptions or high periods of demand.

"One of the scenarios that we are protecting against for New South Wales is something that happened in Longford in Victoria," he said.

"In 1998 in the middle of winter there was a gas supply interruption that created two weeks of no hot water for the residents of Melbourne."

Mr Moraza says the Tomago site has several strategic benefits.

"Newcastle is a great location for a project like this, it is in the heart of a very large natural gas market," he said."We can supply Sydney from this project because Sydney and Newcastle are linked by a transmission pipeline.

"But some of the future gas supplies that we are going to be bringing into the market are going to be coming from Gloucester and the Hunter precinct."

Mr Moraza says the facility should be operating within three years.

"We'll have this up and running by April 2015," he said.

"It sounds like a long time down the track but a lot of the materials that we are bringing in here, a lot of the techniques being used are quite exotic.

"There are some long lead times on procuring this equipment and so it will take a good three years to get this project constructed and operational."